Encuesta

Una nueva norma les quita el misterio a los préstamos rechazados

New rule demystifies loan rejection

by Anna Haug

Consumers turned down for a loan will now have the opportunity to find out why. As of July 21, lenders must give consumers a free copy of their credit score when they are rejected for a loan or approved for a higher-rate loan due to a low score (USA Today).

The new law, a component of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires lenders to provide consumers with the credit score used to make the loan decision, as well as an explanation of that decision.The explanation must show how the credit score ranks nationally, and identify which factors negatively affected the score. The Dodd-Frank Wall Street Reform and Consumer Protection Act purpose was to promote the financial stability of the United States by improving accountability and transparency in the financial system.

Consumers can use this information to gain an understanding of how to improve a less-than-stellar credit score. If you need help raising your credit score, start with these suggestions from the Consumer Financial Protection Bureau, Washington, D.C.:

Make timely payments

Paying all of your bills on time can boost your score. Ask creditors to assign you an easy-to-remember due date, and take advantage of automated bill pay services that may be available at your credit union.

Don't max out your credit

Using too much of your available credit can bring down your score. That's because scoring formulas calculate that consumers who use too much credit may struggle to pay it back. Aim to use 30% or less of your total credit limit.

Limit new accounts

Applying for or opening too many new lines of credit in a short period of time can ding your credit score. A line of credit is an agreement between a financial institution and a customer that allows the customer to borrow a set amount of money at any time they want. Avoid opening new credit accounts if you're planning to take out an auto, mortgage, or other significant loan. And stay away from store credit cards, which also can lower your score.

Check your credit report

You can receive a free copy of your credit report from each of the three main consumer reporting agencies-Experian, Equifax, and TransUnion-every year. Stagger your requests to each agency throughout the year to stay as up-to-date as possible. Visit annualcreditreport.com to obtain your copy.

Look for errors

When you receive your credit report, examine it for mistakes that could be hurting your credit score. If you do find a problem, contact the consumer reporting agency and the creditor in question. Be sure to include documents and other evidence to support your claim. If the agency and the creditor find your claim to be valid, they'll correct your report. Mary from New York encountered this problem because of identity theft. "Not only is it important to check your credit report regularly to ensure there are no mistakes, but it can also catch for other problems like identify theft that can seriously hurt your credit score. From now I check my credit score regularly to eliminate the risk of problems going unnoticed."

For further information contact your local credit union for any other questions.